Ethereum has seen a significant drop in daily active addresses (DAAs) over the past four months. This raises concerns about further downside for Ether ( Ethereum) in the coming weeks.
Investors are scared by a stagnant Ethereum price
According to Santiment data, the number of Ether DAA fell to 152,000 on October 21. This is its lowest level since June. The plunge saw fewer unique Ethereum addresses interfacing with the network.
Daily Ethereum active addresses count in a given time frame. Source: Santiment
The drop is interesting because it comes after Ether’s 80%+ correction from its November 2021 peak of $4,850. This could be a sign that Ethereum users have decided to exit the market or pause their interactions with the blockchain network following the market’s decline.
Santiment analysts attributed the decline on “weak hands,” sentimental traders that drop out of the market in a bearish, or stagnant phase.
“Disinterest is high because [the Ethereum] prices are stagnant.”
Ether’s price has traded in the $1,200-$1,400 area for more than a month. This was accompanied by a decrease in weekly trading volumes.
The disinterest of investors can also be seen in Ethereum-based investment funds. These funds saw outflows of $3.9 million during the week ended Oct. 14, according to CoinShares’ most recent weekly report.
Capital flowing in and out of crypto funds. Source: CoinShares
These outflows also reached $368.70million on a Year-to-date (YTD).
Play price crash of 40% ETH
With other riskier assets, crypto prices fell across 2022 due to global central banks’ tightening measures to control rising inflation. They are at risk of being bullish as inflation continues to rise, which could lead to more rate increases in the future.
BREAKING:
*MAY 2023 FED FUTURES HIT 5.5% AS TRADERS PRICE INSIDE ANOTHER RATEHIKE
— Investing.com (@Investingcom)
October 20, 2022
Inflation-related macro risks could cause Ethereum to suffer. In other words, ETH/USD could fall below its rising trendline support, triggering an ascending triangle continuation setup, as shown in the chart below.
ETH/USD weekly price chart featuring ascending triangle breakdown setup. Source: TradingView
After adding the maximum distance between the horizontal trendline resistance of the rising trendline support and the breakdown point, the profit target for an ascending triangle pattern will be calculated. ETH’s downside target is therefore $750 or 40% below current prices.
Similar: Why has the crypto market fallen today?
A rebound from the lower trendline could lead Ether to see a rally towards the upper trendline. This means that October’s prices could rise to $1,800, an increase of 40% over current prices.
These views and opinions are the author’s and do not necessarily reflect those of Cointelegraph.com. You should do your research before making any investment or trading decision.
